What Is Title Insurance?

Title Basics

What is Title Insurance?

“What Is Title Insurance?” is a questioned often posed by anyone interested in buying property. Put simply, the answer is: Title Insurance is a policy provided by a title company that ensures your rights, whether you are the buyer or lender of either residential or commercial property. Title Insurance covers both the buyer and mortgage lender from any problems arising from the past history of the property that is not disclosed in the title search.

Types of Title Insurance

There are two kinds of Title Insurance policies issued by your title company protecting the rights of the interested parties. Both are only issued after a thorough search of all public records relating to the residential or commercial property has been conducted by a title professional to search for any possible flaws to a clear title (such as unpaid taxes, unsatisfied liens, undeclared heirs or any other undisclosed problem).

The Owner’s Title Insurance Policy covers the buyer both legally and financially and insures that the title company will stand with you to resolve any problems found after you buy your home.

You will not be liable for any title flaw that has arisen from the property’s history before you purchased it and the Owner’s Title Insurance Policy will stay in effect for as long as you or your heirs own the property, whether that is one year or 50 years. Your title company will be there to help pay valid claims and cover the costs of defending any attack on your title, now or in the future.

The Lender’s (or Loan) Title Insurance Policy, is a policy assuring the mortgage lender (who also has great financial interest in the property) that their institution will also not be impacted by undisclosed title problems discovered after the title search. This policy covers the lender for the amount of the loan and declines accordingly as the loan is paid off. Just as they may require fire insurance or other coverage on the property up for sale, most lenders require a Lender’s Title Insurance Policy as security for their investment in real estate.

The existence of title insurance, with its element of risk elimination before insuring, allows home buyers to enjoy peace of mind knowing they are protected against claim and loss and allows lenders to make mortgage funds available in different markets or under adverse economic conditions, knowing their investment is a safe one.

For more information on title insurance, visit www.alta.com.